SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
April 15, 1998
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Date of Report (Date of earliest event reported)
360 COMMUNICATIONS COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 1 - 14108 47-0649117
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(State of Incorporation) (Commission File No.) (IRS Employer Identification No.)
8725 W. Higgins Road, Chicago, Illinois 60631
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(Address of principal executive offices) (Zip Code)
(773) 399-2500
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(Registrant's telephone number, including area code)
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Item 5. Other Events.
On April 15, 1998, 360 Communications Company (the "Company") issued a
press release announcing the consolidated operating results of the Company and
its subsidiaries for the first quarter of 1998. A copy of such press release is
attached hereto as Exhibit 1.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit 1: Press Release issued by 360 Communications Company on April
15, 1998 announcing the consolidated operating results of the Company and its
subsidiaries for the first quarter of 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
360 Communications Company
By: /s/ Jeffery R. Gardner
Jeffery R. Gardner
Senior Vice President - Finance
(Principal Accounting Officer)
Date: April 15, 1998
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EXHIBIT INDEX
Exhibit
No. Description of Exhibits
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1 Press Release issued by 360 Communications Company on April 15,
1998 announcing the consolidated operating results of the Company
and its subsidiaries for the first quarter of 1998.
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360 Communications....Corporate Communications....8725 W. Higgins
Road....Chicago, Illinois 60631....(773)399-2200
FOR IMMEDIATE RELEASE
MEDIA:
Margaret Kirch Cohen Sal Cinquegrani
(773) 399-2385 (773) 399-2783
ANALYSTS:
Linda Wait
(773) 399-2284
360 REPORTS RECORD FIRST QUARTER NET INCOME AND REVENUES
(Chicago) April 15, 1998 -- 360 Communications Company (NYSE:XO) today
reported record first quarter 1998 net income, driven by record revenues and
strong operating cash flow.
360 reported record net income of $44.1 million, or 36 cents per share,
for the first quarter of 1998, compared with $9.4 million, or 8 cents per share,
for the first quarter of 1997. Excluding gains from 1998 and 1997 divestitures
of unconsolidated entities, first quarter 1998 earnings per share increased 250
percent to 21 cents from 6 cents in 1997.
1998 net income includes an after-tax gain of $18.1 million, or 15
cents per share, from the sale of the company's 28 percent interest in the
Omaha, Neb., cellular market. Excluding the Omaha transaction, net income would
have been $26 million. In 1997, 360's first quarter net income included an
after-tax gain of $2 million as a result of the divestiture of its ownership
interests in two unconsolidated entities.
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360 Reports First Quarter Results
Page 2
360 reported record total operating revenues of $355 million during the
first quarter of 1998, up 15.6 percent from $307 million in the same period last
year. Service revenues were $342 million, up 16.2 percent from $294 million
reported in the first quarter of 1997.
For the first quarter, 360 reported operating cash flow of $130
million, including a loss of $1.5 million for residential long distance. This
represents a 47 percent increase over $88 million reported in the first quarter
of 1997. Operating cash flow as a percentage of service revenues was 38 percent
for the quarter, compared with 30 percent for the same period last year.
Cellular-only cash flow margin was 39 percent for the first quarter of 1998.
Dennis E. Foster, president and chief executive officer of 360
Communications, said, "Our strategy of maximizing revenues and managing the
decline in average revenue per customer continued to produce improved results
for the third consecutive quarter, and our team is diligently focused on our
operating performance and strong revenue growth.
"On the network side, our Southeast region is gearing up to launch Code
Division Multiple Access (CDMA) digital service in Raleigh in the second
quarter. Our plans are on target to deploy digital service in several other
large markets this year, including Greensboro, North Carolina; Greenville, South
Carolina; Norfolk and Richmond, Virginia; and Toledo, Ohio."
360 added nearly 61,500 net customers during the quarter, down 51
percent from 124,500 during the first quarter of 1997. As of March 31, 1998, the
company had more than 2.6 million customers, up 16 percent from nearly 2.3
million at March 31, 1997.
The company reported a market penetration rate of 10.79 percent,
compared with 9.36 percent at March 31, 1997. At March 31, 1998, the company had
reached 20 percent penetration in seven markets and 15 percent penetration in
seven additional markets.
360's average monthly churn rate, which measures the percentage of
customers who discontinue service, was 1.97 percent for the first quarter of
1998, compared with 1.87 percent for the first quarter of 1997.
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360 Reports First Quarter Results
Page 3
Service revenue per average customer per month for the first quarter of
1998 was $43.46, down 1 percent from $43.91 during the prior-year period.
During the quarter, the company entered into a definitive agreement to
merge with Little Rock-based ALLTEL Corporation. The companies expect the merger
to be completed during the third quarter of this year, following the required
approvals.
Chicago-based 360 Communications provides wireless voice and data
services to more than 2.6 million customers in more than 100 markets in 15
states. The company also offers residential long distance and paging services.
In addition to the New York Stock Exchange, 360 Communications' stock is listed
on the Chicago and Pacific stock exchanges under the symbol XO.
Forward-Looking Statements
Except for historical information contained herein, the matters
discussed and the statements made in this release concerning the company's
future prospects are forward-looking statements. Such statements are subject to
risks and uncertainties that could cause actual results or outcomes to differ
materially. Such risks and uncertainties are discussed under the heading
"Forward-Looking Statements" in the company's most recent report on Form 10-K
filed with the Securities and Exchange Commission. Forward-looking statements
speak only as of the date hereof and the company undertakes no obligation to
revise or update such statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
# # #
To obtain copies of the company's Form 10-K, 10-Qs, or copies of quarterly
earnings and other recent news releases issued by the company, please call
toll-free 1.888.360.INFO (1.888.360.4636), 24 hours a day, seven days a week.
360 Communications' news releases also are available through PR Newswire and may
be obtained by calling 1.800.578.7888, #111849. 360's Internet address is
www.360.com.
EDITOR'S NOTE: A degrees SYMBOL should immediately follow the numerals "360" in
the company's name. The word Degrees is NOT part of the company's name. If you
are unable to add the degree symbol, just print "360 Communications."
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360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
For the Three Months
Ended March 31,
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1998 1997
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Operating Revenues
Service revenues $ 341,575 $ 293,970
Equipment sales 13,260 12,876
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Total operating revenues 354,835 306,846
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Operating Expenses
Cost of service 40,792 41,489
Cost of equipment sales 28,434 28,449
Other operations expense 17,873 14,993
Sales, marketing and advertising expenses 56,386 60,581
General, administrative and other expenses 81,673 73,092
Depreciation and amortization 49,833 45,529
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Total operating expenses 274,991 264,133
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Operating Income 79,844 42,713
Interest expense (33,259) (31,190)
Minority interests in net income
of consolidated entities (13,647) (9,709)
Equity in net income of
unconsolidated entities 16,174 13,163
Other income, net 30,536 (1) 3,014 (2)
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Income before income taxes 79,648 17,991
Income tax expense 35,528 8,546
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Net income $ 44,120 $ 9,445
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Basic and diluted earnings per share $ 0.36 $ 0.08
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Weighted average shares
outstanding 121,287 123,309
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(1) In February 1998, the Company recognized a gain of $30.5 million ($18.1
million, net of tax) in connection with the divestiture of its ownership
interest in an unconsolidated entity.
(2) In January 1997, the Company recognized a gain of $3 million ($2 million,
net of tax) in connection with the divestiture of its ownership interests
in two of its unconsolidated entities.
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360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED OPERATING DATA
(Unaudited)
For the Three Months Ended
and as of March 31,
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1998 1997
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Consolidated
EBITDA (in thousands) $ 129,677 $ 88,242
EBITDA margin 37.96% 30.02%
Capital expenditures (in thousands) $ 32,544 $ 23,273
Cellular
Controlled POPs 24,501,552 24,358,200
Controlled customers 2,644,073 2,280,938
Gross customer additions 220,363 254,072
Net customer additions 61,460 124,526
Average customers 2,606,554 2,219,930
Churn 1.97% 1.87%
Penetration 10.79% 9.36%
Service revenue per average customer per month $ 43.46 $ 43.91
EBITDA margin 38.60% 31.43%
Cost to acquire a new customer $ 324 $ 290
Long Distance
Revenues (in thousands) $ 2,238 $ 1,518
EBITDA (in thousands) $ (1,509) $ (3,688)
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360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, December 31,
1998 1997
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ASSETS
Current Assets
Cash and cash equivalents $ 7,123 $ 3,471
Accounts receivable, less allowances
of $6,187 and $6,602, respectively 93,036 100,472
Other receivables 27,707 26,981
Unbilled revenue 35,087 35,618
Inventory 26,590 34,354
Deferred income taxes 15,932 15,220
Prepaid expenses and other 8,976 14,051
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Total current assets 214,451 230,167
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Property, plant and equipment 1,782,963 1,750,097
Less: accumulated depreciation 603,721 561,140
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Property, plant and equipment, net 1,179,242 1,188,957
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Investments in unconsolidated entities 484,575 459,669
Intangibles, net 1,036,109 1,045,007
Other assets 21,857 18,124
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Total assets $ 2,936,234 $ 2,941,924
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LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities
Trade accounts and other payables $ 161,807 $ 241,127
Short-term borrowings 20,400 18,150
Advance billings 32,450 31,779
Accrued taxes 39,823 17,846
Accrued agent commissions 8,960 11,923
Other 30,303 46,386
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Total current liabilities 293,743 367,211
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Long-term debt 1,845,400 1,825,347
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Deferred Credits and Other Liabilities
Deferred income taxes 63,804 60,470
Postretirement and other benefit obligations 6,495 6,347
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Total deferred credits and other liabilities 70,299 66,817
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Minority interests in consolidated entities 171,386 173,248
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Shareowners' Equity
Common stock 1,233 1,233
Additional paid-in capital 774,943 774,938
Accumulated deficit (185,317) (229,437)
Treasury stock, at cost (35,453) (37,433)
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Total shareowners' equity 555,406 509,301
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Total liabilities and shareowners' equity $ 2,936,234 $ 2,941,924
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360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the Three Months
Ended March 31,
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1998 1997
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Operating Activities
Net income $ 44,120 $ 9,445
Adjustments to reconcile net income to net
cash provided by (used for) operating activities:
Depreciation and amortization 49,833 45,529
Deferred income taxes 12,249 2,161
Gain on sale of cellular investments (30,506) (3,029)
Equity in net income of unconsolidated
entities, net of distributions (8,846) (7,803)
Minority interests in net income of
consolidated entities 13,647 9,709
Changes in operating assets and
liabilities, excluding acquisitions
Receivables, net 7,967 15,170
Other current assets 12,113 (4,389)
Trade accounts and other payables (63,087) (75,932)
Accrued expenses and other
current liabilities (11,440) (7,763)
Noncurrent assets and liabilities, net (2,907) (1,112)
Other, net 615 1,178
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Net Cash Provided by (Used for) Operating Activities 23,758 (16,836)
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Investing Activities
Capital expenditures (32,544) (23,273)
Acquistions of additional interests in
consolidated entities (14,284) (24,812)
Divestitures of cellular investments 15,199 3,888
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Net Cash Used for Investing Activities (31,629) (44,197)
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Financing Activities
Net payments under bank revolving credit facility (80,000) (100,000)
Proceeds from long-term debt 100,000 200,000
Debt issuance costs (856) (1,609)
Net short-term borrowings (payments) 2,250 (30,000)
Distributions to minority investors (10,383) (2,040)
Other, net 512 798
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Net Cash Provided by Financing Activities 11,523 67,149
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Increase in Cash and Cash Equivalents 3,652 6,116
Cash and Cash Equivalents at Beginning of Period 3,471 2,554
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Cash and Cash Equivalents at End of Period $ 7,123 $ 8,670
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